Mortgage affordability fails to impress first-time buyers

Britain’s homeowners are typically finding their mortgage repayments twice as affordable as when house prices peaked, in 2007.

Research from Halifax has revealed that in June, the average monthly mortgage repayment accounted for 28% of disposable income, compared to 50% three years ago.

However, first-time buyer numbers fell to 94,600 in the first six months of 2010, half the number for the same period of 2007.

According to the lender, over 50% of potential first-time buyers questioned continue to see affordability as a barrier to homeownership, despite the fact that 94% of those who get a foot on the property ladder currently benefit from a £250,000 stamp duty threshold.

Halifax commercial director for mortgages, Stephen Noakes, comments: “We believe it’s important that first-time buyers understand that whilst there are still challenges in raising deposits, other market conditions are more positive.”

He adds: “Affordability has significantly improved, meaning the amount of a typical first-time buyer’s monthly pay packet that needs to be dedicated to their mortgage is now below the 25 year average and importantly, despite perceptions, eight out of ten first-time buyer mortgages are approved.”

Earlier this month, the Home Builders’ Federation reported that first-time buyer numbers in England and Wales had hit a 35 year low, with the Federation’s research putting the average age of an unassisted first-time buyer at 37.

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